Considering that for every 100 cardholders across the globe there are 58 who own a co-branded card, and that the total number of credit cards used solely in Hong Kong was 19.46 million in 2018, the exact number of co-branded cards used globally is likely to be quite impressive.
Many large companies, such as Starbucks, Amazon, or Uber, have recently launched their own co-branded credit cards in partnership with globally renowned credit card issuers like Mastercard, American Express or Visa.
So, why are such major brands embracing the idea of having a co-branded credit card?
A co-branded credit card functions in the same way as a regular credit card and can be used anywhere. The only difference is that this card is sponsored by two parties - a particular retailer and a particular credit card issuer or network. Once they partner up, they work together on creating a credit card that has the logo of both parties and provides retailer-specific perks and rewards for customers who are loyal to the brand in question.
Cardholders are entitled to merchandise discounts, advance notice of sales, shopping points or cashback opportunities when they make a purchase. Since co-branded cards are open loop credit cards, cardholders can use them not only in the sponsoring merchant’s store, but also when purchasing from other retailers who accept the cards from the card issuer.
Co-branded credit cards and programs like UniCard’s co-branding Mastercard prepaid card solution, have many benefits for both consumers and retailers and are essential for creating a strong consumer-brand bond, which is the cornerstone of every successful business.
Co-branded cards can prove to be more than useful once a cardholder understands how to use them to their full advantage.
Their numerous benefits lie in their unique rewarding system, as sponsoring merchants always offer their cardholders something in return - better terms, generous discounts, and various incentives. Although cardholders can earn rewards from every purchase they make with a co-branded card, the highest rewards can be obtained only by purchasing the services and goods directly from the affiliated retailer. Therefore, to be able to truly reap the rewards such a system has to offer, choose a card issued by a brand you are loyal to and purchase from regularly.
Another important aspect is the emotional bond between a customer and a certain brand. Loyal customers feel satisfied when they purchase from the brand they love and are even willing to go out of their way so they could buy a product directly from the brand’s store. Using a co-branded card fosters that relationship since the brand becomes a part of a cardholder’s everyday life. Every time cardholders use the card they see the brand’s logo, which further strengthens the customer-brand bond and the feeling of loyalty.
Another perk of having a co-branded card is its practicality. You are included in the loyalty program of your favourite brand and, at the same time, have an open loop credit card which can be used almost anywhere across the globe. For instance, UniCard’s co-branded Mastercard prepaid card is internationally accepted and can be used in every store that accepts Mastercard.
Having a co-branded card gives its cardholder the benefit of 24/7 customer service available at the push of a button. Common problems cardholders may face, such as misplacing or losing the card, or dealing with a faulty card, become easier to address when the users have a customer support system that is always within reach and ready to offer their assistance as quickly as possible.
A well-designed and customised co-branding program like the one offered by Unicard, brings a myriad of advantages to brands who are looking to gain more business opportunities, increase customer loyalty, build their credibility, strengthen their position in the market, and many more.
Since 71% of consumers state that their loyalty program membership positively affects the relationship they have with a brand, it comes as no surprise that co-branded cards play an important role in increasing customer loyalty. Not only do co-branded cards foster these loyalty programs, but they also supercharge them by taking them outside the store - customers will earn the rewards whenever they use their card and not just when they shop with the affiliated merchant.
Once your customers know that they will be rewarded if they purchase your products, they will feel more appreciated, incentivized and encouraged to become return customers and, hence, less likely to be drawn to your competitors.
The partnership formed between the merchant and the credit card issuer increases their exposure with the public and facilitates new customer acquisition through shared consumer loyalty. The decision to co-brand a credit card leads to both parties sharing their customers and setting up a shared customer pool. This enables the retailer to access the card issuer’s customer database and vice versa. As a result, both the merchant and the issuer increase their visibility and exposure, which inevitably leads to expanding their customer pool.
Besides increasing your brand’s loyalty and retaining the old customers, a co-branded card gives you the possibility of gaining new customers through your reward system, especially if your offer is tempting enough to attract even your competitor’s customers. If you offer potential clients better rewards and let your co-branded card act as one of your most effective advertisements, you will be surprised at how easy it can be to acquire new customers.
Interchange fees on credit cards are considered to be one of the highest costs merchants are required to pay for every transaction carried out with a regular credit card. On the other hand, co-branding credit cards allow banks and brands to design a viable monetization system which enables them to split the revenues and distribute the revenue sources effectively. This significantly lowers the expenses retailers have and helps them improve and strengthen their balance sheets.
Co-branded card solution enables brands to gather cardholders shopping data due to the disclosure that allows banks to share this information with affiliates and nonaffiliated third parties. However, bear in mind that this only applies if a cardholder opts for the information-sharing disclosure.
This additional information often proves invaluable to businesses, since it offers insight into the shopping habits of their customers, such as the amount of money they spend, as well as where, when and how they tend to purchase. Such knowledge enables brands to rethink and reinvent their products, services, and pricing structures.
As creating a strong brand image is crucial for a business to become successful in today’s competitive market, retailers are looking for every opportunity to promote their brand. Launching a co-branded credit card is a sure-fire way for a brand to become an important part of their customer’s everyday life. This leads to better brand positioning and enables consumers to associate the brand with a certain lifestyle, which in turn makes the brand stand out from the crowd, enhances branding efforts and increases brand awareness.
Since co-branded cards enable brands to build customer loyalty, improve their brand image and enhance brand awareness, extend their customer pool, and gain more business opportunities, it is no wonder that their number is on the rise.
If you are thinking of launching a co-branded card for your business, take a look at all the perks our co-branding program has to offer.